State agencies worry CEOs

By Ludger Kasumuni The Citizen Reporter  Dar es Salaam. Investors in the country have raised concern over the increasing number of public enterprises noting that they have been squeezing them out of the competition.The parastatals have investments worth Sh10.3 trillion, representing 30 per cent of the national gross domestic product (GDP). Apart from scrambling for loans with them in financial institutions, the public enterprises also use their funds to invest in areas where the private sector has identified as well. The chairman of the Chief Executive Officers Round Table of Tanzania (CEOrt), Mr Ali Mufuruki, said in Dar es Salaam on Tuesday evening that the bodies have also been imposing levies to be paid by the private firms, adding to the latter’s operational costs. Without naming them, Mr Mufuruki noted, for instance, that some parastatals have been soliciting for loans, and investing in areas which are not their core business such as real estate. Mr Mufuruki was speaking during the CEOrt meeting in which the Kigoma North MP, Mr Zitto Kabwe (Chadema), also expressed concern that there was no clear policy to govern the management of public enterprises. Mr Kabwe, who is also the chairman of the Public Organisations Accounts Committee (POAC), was a guest speaker during the meeting. He noted that the major problem as far as the public enterprises are concerned was political interference. The legislator noted that there were more than 230 parastatals in the country, with the possibility of their number increasing. He said some of them have been performing well, but most have not been performing as planned, mainly because of political meddling. Welcoming the MP earlier, Mr Mufuruki noted that the mushrooming of public parastatals with numerous fees and charges was becoming unbearable to private business organisations.“The proliferation of executive agencies and regulatory bodies acting as tax collectors is raising the price of goods and services. The cost of running business is increasing with the multiple establishments of these new forms of parastatals,” he further said. He lamented: “They are not only regulating as they were supposed to do, but they are also reaping a lot of money and investing heavily to an extent that they compete with us in the market. They are a real burden to us.” Citing the case of the Energy and Water Utilities Regulatory Authority (Ewura), he noted that multiple charges in petroleum products were among major factors which make fuel prices high. “One living example is the price of petrol and diesel, which is above Sh2,000 a litre due to the long chains of fees and charges imposed by Ewura and some executive agencies. A litre of petrol costs almost Sh450 when it is offloaded at the port, but when tax is added its value goes up to about Sh1,050. But when a dealer sells to customers its price increases up to more than Sh2,000 because of excessive charges by regulators,” he said. However, in his presentation, Mr Kabwe noted that while some parastatals might be seen as a burden to the private sector, there were others which have been playing a pivotal role in the national economy. However, he was also of the opinion that the mushrooming of public enterprises without a clear policy on how they should be managed was not only a huge burden to tax payers, but they sometimes stifle good governance. He said lack of such a policy was also to blame for the birth of parastatals whose number now comes to 238 with a total investment of Sh10.3 trillion or about 30 per cent of the gross domestic product (GDP).  Mr Kabwe listed the number of parastatals (in brackets) according to categories as: (28) Water Authorities, (35 Regulatory Authorities, (36) Executive Agencies, (25) higher learning institutions, (39) Public Parastatals, (39) Government Institutions and several others in which the government has a stake. “Some of these parastatals are vital as they pay huge dividends to the government, especially the pension funds, National Housing Corporation and Tanzania Ports Authority. But most of the new forms of parastatals are just acting like TRA and agents of misusing taxpayers’ money,” he said. Mr Kabwe said pension funds such as the National Social Security Fund (NSSF) and Parastatal Pension Fund (PPF) have a total investment of Sh2.3 trillion, accounting for seven per cent of the GDP. He also said lack of a clear investment policy was to blame for the shoddy privatisation. For instance, he noted, the government collected only Sh440 billion from selling 330 parastatals, but all the funds were swallowed by the new forms of parastatals. “Strangely, the government has guaranteed for public enterprises (PEs) more than Sh461 billion and given them loans to the tune of Sh478 billion as of June 30, 2011...the huge amount of direct loans are going to be defaulted and more than Sh200 billion worth of loans has been guaranteed by the government,” he said. Mr Kabwe noted another trend under which some parastatals have been mobilising colossal amounts of money from fees to the extent that they have been providing loans to the government. He cited the case of the Tanzania Communications Regulatory Authority (TCRA) which provided a loan for rehabilitation of Bagamoyo Road. But in a rejoinder, the Ewura head of communications, Mr Titus Kaguo, refuted allegations that they were responsible for increased prices of petroleum products. He said there was clear formula in calculating fuel prices based on prevailing prices at the world market, transportation costs as well as insurance in order to determine the profit margin. Mr Kaguo said charges imposed by other regulatory bodies on petroleum and gas products were according to governing national policies. He also refuted reports that there was a plan to restructure Ewura into two entities. For his part, a senior lecturer of economics at the University of Dar es Salaam, Dr Hajji Semboja, also blamed political interference and bureaucracy in running the parastatals. “The new parastatals are similar to the old ones which were inefficient, ineffective, misguided by wrong policies, irregularities, loss making entities and a burden to tax payers because of frequent political interference. The new ones are taking the same route. We are thus back to square one,” added Dr Semboja.